1. Field of the Invention
This invention relates to the field of systems and methods for virtual markets with fulfillment of orders via product pick-up.
2. Description of the Related Art
There is no longer any doubt that the Internet and the personal computer have transformed the consumer habits of the world we live in. In just a few short years, e-commerce has become a multi-billion dollar enterprise with companies such as Ebay™, Amazon™, Google™ and others leading the way. Whether it's buying books or booking tickets, more and more people worldwide are turning to web-based retailers to spend their money, forcing traditional brick and mortar retailers to reconsider their place in this new world—a world that won't wait and will soon leave their form of retail behind.
As illustrated in Table 1, Internet traffic is significantly increasing across the global spectrum. As the technology becomes more user friendly, developing and third-world nations become more technologically advanced, and cultural and societal norms adapt to societies where more and more of human networking, commercial activities and human communication occurs via Internet resources, this “online” audience of consumers will only continue to augment.
Worldwide Internet Audience (000)January 2008 vs. January 2007Total Worldwide, Age 15+ — Home and Work Locations*Source: comScore World MetrixRegionJan-07Jan-08Percent ChangeWorldwide746,934824,43510.4%Asia Pacific271,192308,81713.9%Europe218,063232,8666.8%North America173,839183,8235.7%Latin America 50,641 59,02516.6%Middle East-Africa 33,199 39,90420.2%*Excludes traffic from public computers such as Internet cafes or access from mobile phones or PDAs.comScore Networks, Inc., Mar. 18, 2008, Digital World: State of the Internet
As Internet traffic grows, it is expected that, so too, will the number of consumers who click their way to purchases, as opposed to purchasing goods from the traditional brick and mortar retail outlet. As the consumer begins to turn to the Internet as the preferred modality for engaging in commerce, it is expected that advertising focus and income will also turn away from traditional shopping retail centers.
Engaging in commerce in an online forum has numerous advantages over the traditional brick and mortar retail environment, including but not limited to: accessibility, ease of use, selection of products, better pricing, and, importantly, the reduced amount of time it takes to complete a transaction (according to the Pew Research Center, 68% of middle class Americans report that “having enough free time to do the things you want” is their highest priority—higher even than being wealthy (12%); Pew Research Center—Inside the Middle Class: Bad Times Hit the Good Life, Apr. 9, 2008).
One retail sector in which there is large potential for Internet commerce growth is grocery stores. During the “dot com” boom of the 1990s, online groceries joined the rush to the web. However, characteristic of the dotcom bubble as a whole, these online groceries were faced with unconstrained spending, overwhelming start-up costs, the prohibitive funds needed to create and purchase web content, and the impediment of developing effective distribution systems. In the end, by the time all the costs were counted, a can of Campbell'S™ soup cost more to purchase online than it would at the traditional grocery retail market. It also proved difficult for the Internet grocery start-up to build enough awareness and trust, fast-enough, to allow the model to flourish. The resultant slower than expected consumer adoption of buying groceries over the Internet resulted in the early online grocery market pioneers being acquired or closed down during the dotcom bust. For example, Safeway™ acquired GroceryWorks™, Ahold USA™ acquired Peapod™ and Streamline™, and Shoplink™ and Webvan™ closed down.
In the wake of the dotcom bust, existing companies in the grocery retail market began to make moves to fill the void, capitalizing on existing corporate resources, brand power and existing customer bases, to create a web-based, demand driven supply network that would work for online grocery ordering and delivery.
Both currently utilized and now defunct online grocery store business models can generally be categorized into one of three main groups: a) models that implement order fulfillment from retail stores and warehouses with delivery; b) models that utilize consumer pick-up from retail stores; and c) models that offer secondary grocery store services.
Order Fulfillment and Delivery Models
The order fulfillment model is simply a model of online ordering and subsequent delivery. In some instances, order fulfillment occurs at a warehouse location. In other instances, order fulfillment occurs at the traditional brick and mortar retail store. Whether fulfillment occurs at a warehouse or the traditional retail store, each model requires employee fulfillment of the orders, which can be labor intensive. Further, the cost of delivery must be factored into each online purchase and passed onto the customer. To accommodate these additional costs, generally, these models charge an additional overhead fee for the packaging and delivery service they provide. Grocery retailers that currently offer such online services include Safeway™, Amazon Fresh™, Net Grocer™ and Peapod™, among others. Further examples of such remote order fulfillment and delivery models include Waller, et al., U.S. Patent Application US 2008/0029595 and Razumov, U.S. Pat. No. 7,024,378 B2.
Pick-Up from Stores
Another business model that several brick-and-click grocers offer is pickup from retail stores. In this model, again, the grocery ordering is done remotely by the consumer online. Then, the groceries are packaged and available for pick-up by the consumer at a convenient retail location. As with the order fulfillment and delivery model, there is generally an additional overhead fee associated with this service. Existing retailers that offer such a service include Krogers™ and Alberston'S™, among others. Further examples of such pick-up from retail store models include Bared, U.S. Patent Application, US 2003/0177072 A1.
Secondary Grocery Store Services
This model does not offer remote purchase of groceries, but rather offers secondary services to increase consumer loyalty to pre-existing brick and mortar grocery store retailers. For example, these websites offer information on exclusive in-store specials, coupons, prescription refills, and a tool that can be utilized by the consumer to build a shopping list to assist with in-store shopping. Importantly, outside of offering services to track down hard to find grocery items or ordering specialty platters, no grocery services exist on these sites. Existing retailers that offer such services include Giant Eagle™, H.E.B.™ and Winn-Dixie™.
Common to all the aforementioned currently utilized online grocery store business models is a two-dimensional display interface with which the consumer interacts to place their order. These two-dimensional interfaces utilize a search and find modality for a user to access certain grocery goods on the site. For example, an individual who wants to purchase breakfast cereal would type “cereal” into the search box and hit search. The consumer would then be provided with a scroll down menu of all the available cereal options. However, such a long, scrolling, text-based list of items can act as an impediment to customer satisfaction for consumers who want to be able to access the facts about the items they are buying; visualize the item; assess the item's shape or color; or evaluate its nutritional content.
Each of the forgoing online grocery store models has numerous problems associated with it. First, additional cost. In order to compensate for larger overhead costs, both the fulfillment and delivery and pick-up models add an additional service fee cost onto the base cost of the grocery goods purchased. This overhead cost dissuades many shoppers who view the cost, week after week, as not reasonable in exchange for the benefit of the convenience gained.
Second, delivery complexity. Delivery becomes challenging and expensive because of the varied temperature control needed in the delivery trucks and vans. Further, the items to be delivered are often bulky and heavy. This high volume to value ratio generally increases the relative cost of delivery since more trucks and drivers are needed to transport orders. In addition, delivery preparation can be timely and delivery itself can be unreliable. Further, many individuals do not want grocery deliveries being “dropped off” at their home, even if in exchange some amount of leisure time is added to their day. This sentiment is particularly powerful for consumers who do not want groceries dropped off at their home while they are not there. The resultant dance of timing an individual's arrival home with that of the grocery delivery truck can be more of a hassle than the actual convenience of the delivery of the goods in the first instance. For example, few individuals like to be forced to stay at home, waiting for a cable worker or the UPS™ delivery man.
Third, sensory issues. Product quality is often difficult to evaluate online, especially for non-packaged goods such as produce and bread. These items generally fall into the category of “touch and feel” items that customers generally prefer to inspect and have a tactile interaction with before purchasing. Fewer sensory cues are available online than in the physical stores where individuals can often smell or touch fruit to assess whether it is fresh and ripe.
Fourth, temperature issues. Many grocery products are temperature sensitive. Refrigerated and frozen items can spoil easily unless the temperature is controlled. This temperature control issue becomes a problem in delivery oriented services where the temperature of some, but not necessarily all, of the items to be delivered must be controlled. Further, this becomes an issue when the order is simply “dropped off” at a location when an individual is not at home.
Fifth, the technology impediment. As noted previously, the technology interface used by the majority of current online grocery retailers is a two-dimensional search and find interface that presents a user with a scroll down list of applicable items. This experience is generally far removed from that of the consumer in a traditional brick and mortar grocery store, where they have visualization of a number of different cereals available in one view on one shelf (no scrolling down a list or additional searches are needed) and where the consumer has quick access to the item to visually explore its different features from different angles. This drastic change in the user experience of purchasing groceries, coupled with a misunderstanding and lack of comfort with search and find functions, dissuades many older adults (a large percentage of the grocery retail market) from the online grocery forum.
Sixth, the lack of ability to browse. While a large percentage of the groceries purchased by individuals and families are the same from week to week, a certain percentage of most grocery store trips involve some degree of browsing. For example, if a consumer is looking for a new item for a recipe or a new snack food or cookie. In the two-dimensional user interface format of current online grocery models, this type of browsing is not available.
Seventh, high operating costs. For the “pick and pull” business models, a key issue is the added cost and complexity that results from mixing online retailers with traditional brick and mortar grocery store shoppers. In order to efficiently pull and package online orders, these retailers need to employ extra individuals in order not to forsake customer service and efficiency for their traditional shoppers. Further, these stores need to maintain the traditional retail shopping aesthetics of displays and store layouts for the traditional shopper. Also, the trolley rage which occurs from stress in crowded supermarkets, where regular shoppers get annoyed when employees picking online orders cause congestions and consumers picking-up online orders clog check-out lanes, can cause customer dissatisfaction for both traditional and online consumers.
Thus, despite its widely perceived potential at the time and numerous benefits and convenience, the problems associated with the online grocery market have maintained the status quo of individuals obtaining the majority of their groceries from traditional brick and mortar retail venues. The online grocery market has not realized the potential that was forecast for it.